AER LINGUS will announce a profit of more than £50 million when it publishes its 1996 accounts this spring. It seems a healthy enough figure, and the employees will be hoping to share again in the £3.3 million payout they received from last year's profits.
On the face of it, this is a company where industrial relations, should be good. And yet last year alone there were serious problems with the transatlantic cabin crew about allowing a Delta flight attendant in an Aer Lingus cabin, problems with the pilots about a long running pay dispute, and problems with Airmotive and TEAM Aer Lingus.
The latest row, again with transatlantic cabin crew, has been widely publicised. Aer Lingus wants to billet cabin crew overnighting in New York in the Lucerne Hotel on Central Park West. Some reports suggest that the area, and indeed the hotel is upmarket and fashionable. But the cabin crew say the Lucerne is not safe because of the sex crimes recorded in its local police precinct.
Aer Lingus says it carried out a security audit on the hotel and it passed with flying colours. Needless to say, the Lucerne's management indignantly dismisses any suggestion that it is not safe and dispatches glossy colour brochures to journalists covering the story.
In recent days the cabin crew have changed tack; the emphasis now is on the Lucerne's supposed lack of facilities. There is, for example, no restaurant in the hotel. But there one next door, with direct access from the hotel. Not good enough, say cabin crew.
Ms Nora O'Reilly, secretary of the cabin crew committee of SIPTU told Pat Kenny on Tuesday: There are other times that we badly need room service. For example, we had three of our cabin crew who recently had the flu in New York in one of our other hotels, and at that stage you need to be able to at least order a cup of tea or toast and not to have to get up and leave the hotel if you are ill.
The cabin crew also complain about the lack of irons and ironing boards to press uniforms. They used to enjoy much better facilities in New York, and the Lucerne just does not measure up.
It is difficult for the public to summon up much sympathy for their plight. And it defies understanding how such an issue should lead to the extreme of a strike ballot.
The problem seems to lie in a deeply ingrained culture within Aer Lingus where the company was, in the view of many, run largely for the benefit of the employees, notably the transatlantic cabin crew. Working the Atlantic routes was a perk jealously guarded by the more senior members of the crew. The Atlantic is one of the few routes on the Aer Lingus system which provides an overnight allowance.
THE Cahill survival plan was designed to change this culture. In future, the airline have to be run for the benefit of its customers: One element of the plan was to eliminate the dedicated transatlantic cabin crew. Crews are now rostered on the bread and butter routes such as London as well as the more glamorous, and earnings enhancing, routes to North America.
It is now two years since the Cahill plan was implemented. The airline is profitable again, but the old culture still survives in some quarters. There is a hankering after the good old days. And the company management is vulnerable to the charge that it has not successfully sold the message that the good old days are over. The airline business, once a cosy sector, and often a cartel, is now ferociously competitive. Aer Lingus is a small player and has not succeeded in forging a strategic alliance with new partners.
Most important of all, Aer Lingus is not making enough money. Making £53.2 million profit sounds impressive, but that was on a turnover of £800 million, representing a meagre 6.7 per cent return on sales. The chief executive, Mr Gary McGann, has admitted it will have to squeeze more profit out of the business. That means looking at the fine print of all costs including the cost of overnighting in New York.
Other storm clouds are gathering. Aer Lingus has sold most of its non airline assets. The return from the hotels helped sustain the airline when it hit one of its cyclical black spots. That buffer is now gone. The buoyancy of the US and British economies last year helped all airlines, but Aer Lingus will have to be mean and trim to survive a recession or even a simple lack of economic growth in these key markets.
The Atlantic and London routes were profitable last year, but many of Aer Lingus's routes are not. Privately, the company admits that fewer than 50 per cent of routes are profitable. Competition, far from slackening, is growing more intense.
The present bilateral agreement governing air transport between Ireland and the US is up for renegotiation. The American side will he looking for rights to serve Dublin directly.
Should a major US airline get permission to serve New York Dublin, in its present shape Aer Lingus would have little choice but to quit the route. Then it would not matter which hotel the cabin crew stayed in.
